Negative spin on health reform

State agency's projected cost increases are misleading

Florida Insurance Commissioner Kevin McCarty, shown talking to reporters at
the Captol in Tallahassee, has acknowledged that federal subsidies will
largely offset rate increases that his Office of Insurance Regulation has
projected.

HERALD-TRIBUNE ARCHIVE / 2010

Published: Wednesday, August 7, 2013 at 1:00 a.m.

Last Modified: Tuesday, August 6, 2013 at 7:12 p.m.

The Florida Office of Insurance Regulation recently estimated the costs for uninsured residents seeking coverage under Obamacare. Unfortunately, the agency's delivery reflected the state government's general hostility toward the Affordable Care Act.

The FOIR report details for the first time the prices of health plans that private insurers propose for sale to small businesses and uninsured individuals on the state's federally run online exchange. The exchange, required under the law, is scheduled to launch Oct. 1. Policies will take effect Jan. 1.

The state report said that the price of individual health plans sold in 2014 would rise 30 to 40 percent above the cost of similar plans sold today, and that small-business premiums would rise by 5 to 20 percent.

But those projections are misleading, for several reasons:

• They don't take into account substantial federal subsidies for individuals, based on income -- and for numerous small businesses -- that will offset much of the cost.

For example, individuals and families earning up to 400 percent of the poverty line -- or $45,960 for an individual and $78,120 for a family of three -- will be subsidized on a sliding scale. For some, premiums will be capped at a percentage of their annual income.

A 'hypothetical' plan

• As the Miami Herald pointed out, the FOIR projections "were based on a 'hypothetical' health plan that does not exist anywhere in the state."

The private insurance plans on which the state's model is loosely based have yet to be approved by the U.S. Department of Health and Human Services. Those plans, and the prices, could change before Oct. 1.

Competition may also affect prices. Some of the nation's largest health insurers are among 11 companies participating in the exchange for individual plans. Five companies are providing plans for small businesses. Overall, 308 plans will be offered.

• If insurance rates rise in Florida, it will be an exception to the rule. An HHS study of 11 states -- where insurance plans have been approved for sale on their exchanges -- found that premiums are, on average, 20 percent lower than those projected by the nonpartisan Congressional Budget Office.

• The FOIR report neglected to point out that Florida's rates could be higher because this year the Legislature stripped state regulators of the authority to negotiate rates with insurers who offer health plans on the federal exchange.

Maryland insurance regulators, in contrast, say they negotiated lower prices for plans offered on their exchange.

In any case, the health plans to be offered on Florida's exchange will be of a much higher quality than private policies offered to individuals in the past.

To be approved for the exchange, insurers can't deny coverage because of a pre-existing condition, or charge unreasonably high rates because of a pre-existing condition, a person's age or the fact that a woman is in her childbearing years. Also, insurers can't impose annual or lifetime limits on payouts, and must spend at least 85 percent of premium dollars on health care as opposed to overhead.

A million-person gap

The biggest problem in Florida's health care future may not be the price of policies but the fact that people earning incomes below the poverty line aren't eligible to buy insurance on the exchange.

Those individuals were supposed to be covered through expanded Medicaid eligibility, but the Legislature refused to allow it. As a result, about 1 million Floridians will be unable to obtain affordable insurance.

That deficit, which will continue to put a multimillion-dollar burden on hospitals and doctors to provide costly and uncompensated care, needs to be addressed by the Legislature as soon as possible.

For now, uninsured Floridians and small businesses seeking to offer coverage to employees should gather information on Obamacare process and options, then see what the real costs are when the exchanges open.

<p>The Florida Office of Insurance Regulation recently estimated the costs for uninsured residents seeking coverage under Obamacare. Unfortunately, the agency's delivery reflected the state government's general hostility toward the Affordable Care Act.</p><p>The FOIR report details for the first time the prices of health plans that private insurers propose for sale to small businesses and uninsured individuals on the state's federally run online exchange. The exchange, required under the law, is scheduled to launch Oct. 1. Policies will take effect Jan. 1.</p><p>The state report said that the price of individual health plans sold in 2014 would rise 30 to 40 percent above the cost of similar plans sold today, and that small-business premiums would rise by 5 to 20 percent.</p><p>But those projections are misleading, for several reasons:</p><p>• They don't take into account substantial federal subsidies for individuals, based on income -- and for numerous small businesses -- that will offset much of the cost.</p><p>For example, individuals and families earning up to 400 percent of the poverty line -- or $45,960 for an individual and $78,120 for a family of three -- will be subsidized on a sliding scale. For some, premiums will be capped at a percentage of their annual income.</p><p>A 'hypothetical' plan</p><p>• As the Miami Herald pointed out, the FOIR projections "were based on a 'hypothetical' health plan that does not exist anywhere in the state."</p><p>The private insurance plans on which the state's model is loosely based have yet to be approved by the U.S. Department of Health and Human Services. Those plans, and the prices, could change before Oct. 1.</p><p>Competition may also affect prices. Some of the nation's largest health insurers are among 11 companies participating in the exchange for individual plans. Five companies are providing plans for small businesses. Overall, 308 plans will be offered.</p><p>• If insurance rates rise in Florida, it will be an exception to the rule. An HHS study of 11 states -- where insurance plans have been approved for sale on their exchanges -- found that premiums are, on average, 20 percent lower than those projected by the nonpartisan Congressional Budget Office.</p><p>• The FOIR report neglected to point out that Florida's rates could be higher because this year the Legislature stripped state regulators of the authority to negotiate rates with insurers who offer health plans on the federal exchange.</p><p>Maryland insurance regulators, in contrast, say they negotiated lower prices for plans offered on their exchange.</p><p>In any case, the health plans to be offered on Florida's exchange will be of a much higher quality than private policies offered to individuals in the past.</p><p>To be approved for the exchange, insurers can't deny coverage because of a pre-existing condition, or charge unreasonably high rates because of a pre-existing condition, a person's age or the fact that a woman is in her childbearing years. Also, insurers can't impose annual or lifetime limits on payouts, and must spend at least 85 percent of premium dollars on health care as opposed to overhead.</p><p>A million-person gap</p><p>The biggest problem in Florida's health care future may not be the price of policies but the fact that people earning incomes below the poverty line aren't eligible to buy insurance on the exchange.</p><p>Those individuals were supposed to be covered through expanded Medicaid eligibility, but the Legislature refused to allow it. As a result, about 1 million Floridians will be unable to obtain affordable insurance.</p><p>That deficit, which will continue to put a multimillion-dollar burden on hospitals and doctors to provide costly and uncompensated care, needs to be addressed by the Legislature as soon as possible.</p><p>For now, uninsured Floridians and small businesses seeking to offer coverage to employees should gather information on Obamacare process and options, then see what the real costs are when the exchanges open.</p>